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U.S. Securities and Exchange Commission


Securities Exchange Act of 1934 Release No. 50180 / August 11, 2004

Administrative Proceeding File No. 3-11583


On August 11, 2004, the Commission instituted administrative proceedings against Joseph W. Isaac pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act).

The Division of Enforcement (Division) alleges that on July 19, 2004 Isaac was enjoined by Judge Nora M. Manella of the U.S. District Court, Central District of California, from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. The Commission filed its complaint against Isaac and others on January 16, 2003.

The Order alleges that the complaint in the underlying injunctive action alleged that LinkNet, Inc. (LinkNet) and LinkNet de America Latina, Ltd. (Latina), companies that employed Isaac, had conducted a fraudulent offering scheme, collectively raising over $17 million and defrauding more than 1,900 investors located throughout the United States. The complaint alleged that LinkNet and Latina hired Isaac and others to organize and operate a boiler room to solicit investors to purchase securities in LinkNet and Latina. It further alleged that Isaac directed the activities of the boiler room and that Isaac and others made numerous misrepresentations to investors, including: that a public offering of LinkNet stock was imminent; that LinkNet's stock would shortly be listed on Nasdaq; and that LinkNet and Latina had contracts for the sale of hundreds of millions of minutes of long distance service that would generate millions of dollars in revenue to the companies. It also alleged that Isaac and others also failed to disclose that at least thirty percent of the offering proceeds were paid as commissions to the boiler room operations. Finally, the complaint alleged that Isaac acted as an unregistered broker in connection with sales of the stock of LinkNet and Latina, and through the boiler room operations of those issuers

A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Joseph W. Isaac an opportunity to dispute these allegations, and to determine what sanctions, if any, are appropriate and in the public interest. The Commission directed that an administrative law judge shall issue an initial decision in this matter within 210 days from the date of service of the Order Instituting Proceedings.

See also the Order in this matter



Modified: 08/11/2004